Before You Swipe That Card: Do You Know What Fees You're Paying?

Every time you swipe a guest's credit card, your hotel is charged with transaction fees. Since most of your bills are likely paid by credit card, the amount you pay in these fees are substantial. Yet, do you understand what you pay and properly manage that expense?

If you are like many hoteliers, you may not drill down into credit card processing costs - first because you may not have the time, and second because the statements you receive from your payments processor are probably very confusing. If you take a good look at your statements, you will discover that fees vary wildly based on the type of card used and can reach as high as 5% on each payment.

That may be because every transaction is passing through up to 12 middlemen, each of whom tacks on its own processing fee. Then, there are the hidden fees, penalties and questionable business policies that many card processors bury in the fine print. The end result is you may be paying more per transaction than you have to.

The Merchant Bill of Rights is a set of industry standards designed to promote fair credit and debit card processing practices. The primary objective of this advocacy initiative is to educate business owners and hoteliers like you so you can effectively manage the complexity and cost of card acceptance.

First and foremost, The Merchant Bill of Rights focuses on your right to transparent business practices. Too often, business owners pay for card processing without knowing what is really happening behind the scenes. Let's drill in to some of the transparency issues The Merchant Bill of Rights targets - starting with middlemen.

MIDDLEMAN MADNESS

A card transaction involves four entities: a bank, a card company (Visa, MasterCard, etc.), a network connection, and a processor. The processor operates the computer systems that authorize transactions and convert them into cash that is debited from the buyer's bank and credited to the seller's bank.

Surprisingly, the card processor can bring as many as 12 parties - many of whom are not necessarily needed - to the table. These can include (1) an independent contractor representing (2) a salesperson representing (3) an agent representing the bank or processor. That's just the beginning.

Then there can be (4) a referral group, (5) an accounting firm or (6) a non-processing bank. Let's not forget (7) the software company and (8) its salesperson and (9) the dealer who sold the card processing equipment.

Last up, roll in (10) the IP gateway provider, (11) its salesperson and (12) the network service provider. Had enough? Each one may be inflating the processing fee and siphoning a cut of every sale your hotel completes.

The Merchant Bill of Rights says you have a right to know how many people are involved in your payments transactions - and who they are. When more than the four required parties are involved, that's a sign you might be paying too much.

The solution is easy. Call your card processor and ask how many people are piggybacking on transactions. While some card processors will have extra parties tacking on fees, others will help you contain your costs by not involving any extra agents or contractors.

BILLING DRILL-DOWN

Are you confused by complex contracts and dense monthly statements? If so, you are not alone.

Many hoteliers struggle to make sense of what they're being charged for processing services, who is charging them and what services they need or can live without. Here are some "gotchas" to watch out for:

Every business, no matter what size, deserves to be treated fairly and honestly by business partners - especially when the cost of doing business is so high. There are scads of complexities and nuances in the card processing business, but the right processor should simplify the process, not make it more confusing. Studying up on The Merchant Bill of Rights is a great first step to leveling the playing field and gaining control of card processing fees.

Know your rights. Only then will you have the power to control costs, eliminate unnecessary charges and decide who gets a portion of your piggybank.

Bob Carr is chairman and chief executive officer of Heartland Payment Systems ¯ the nation’s fifth largest payments processor and the official preferred provider of card processing, gift marketing, check management, payroll and tip management services for the American Hotel & Lodging Association and 38 state lodging associations. In line with Heartland’s commitment to merchant advocacy and education, Mr. Carr spearheaded The Merchant Bill of Rights (www.merchantbillofrights.org) to promote fair credit and debit card processing practices for all business owners. He has also been a driving force in the enhancement of payment card security with E3™ (www.E3secure.com), Heartland’s end-to-end encryption technology.
Mr. Carr can be contacted at Bob.Carr@e-hps.comExtended Bio...

HotelExecutive.com retains the copyright to the articles published in the Hotel Business Review. Articles cannot be republished without prior written consent by HotelExecutive.com.

The workforce is aging, and many organizations remain unprepared for the changes necessitated by increasing numbers of retirements. What are the old assumptions about retirement, about productivity of older adults, and about what employers can and should do to effectively manage through these changes? This article outlines how the workplace will likely change, and suggest new assumptions and new strategies for maximizing the benefits of an aging workforce.
READ MORE

The U.S. labor market in October reached its longest stretch of job creation since at least World War II. U.S. employers, which added 214,000 jobs to payrolls last month, are on track to post the best yearly gain in employment since 1999. The steady job growth has pushed the nation’s unemployment rate down to 5.8%, which is great news for job seekers and not so great news for anyone in search of talent.
READ MORE

After spending 13 years with the Ritz-Carlton Learning Institute and the last 15 years working with the best hotel companies in the industry, I have learned the best lesson in business today. Inspect what you expect and don’t hire the first warm body that comes through the door, even if they ‘look’ the part and talk a good game. Recruiting great talent takes a lot of time, will try your patience and bust your HR budget on professional recruiters, if you don’t have a plan. The best hiring practice is to ‘select’ NOT ‘hire.’
READ MORE

By Bernadette Scott, Senior Lecturer, Department of Business Management , Glasgow School for Business & Society/Glasgow Caledonian University

The intense competition to secure the best talent continues, with organizations engaging evermore creative recruitment strategies to ensure they get the best from international graduate pools. Fueled by new technologies, market globalization and frequent changes to business models, the demand for organizational talent grows. Talent supply, however, is another issue with the World Economic Forum and the Boston Consulting Group (2011) indicating shortage across 25 countries by 2030. A ready-supply of engaged talent is needed to enhance service quality and to achieve this, graduate talent skills sets must become culturally embedded investments across international hospitality industry organizations. READ MORE

Coming Up In The April Online Hotel Business Review

Feature Focus

Guest Service: Customer Service is a Key Business Differentiator

In today's hyper-competitive, hyper-connected global marketplace, customer experience has assumed a major role as a key business differentiator. There is a growing understanding that competition based on products or price alone is no longer a viable strategy. Since feature or function advantages can be quickly duplicated and/or enhanced, product innovation is no longer the differentiator it once was. And competition based on price impairs profitability. On the other hand, research indicates that 86 percent of consumers said they would be willing to pay more for a better customer experience. To protect both market share and margins, hotel companies must provide customers with consistent, compelling experiences - before, during, and after their purchases - across all major channels. There are many things organizations can do to deliver a superior customer experience. Management must align everything a company does with the customer service experience in mind. They must assign high value to anticipation of customers' real needs and desires, and they must incentivize and reward personal initiative in the pursuit of customer satisfaction. They must respond quickly to customer requests. They must ensure that customer interactions are highly personalized, and they must deliver the right information to the right place at the right time. And perhaps most importantly, upper management must create a culture where customer service is valued and esteemed, taught and rewarded. Customer experience leaders who can drive this kind of cultural change will radically affect their companies? competitive position and business performance. The April issue of the Hotel Business Review will document what some leading hotels are doing to cultivate and manage guest satisfaction in their operations.

For 15 years, the Hotel Business Review journal has been a leading online resource for hotel executives,
providing white papers on best practices in hotel management and operations. With a dedicated board of
more than 300 contributing editors - some of the most recognizable names in hotels - the Hotel Business
Review maintains a progressive flow of exclusive content every week, so that owners, operators, senior
executives, investors and developers can stay informed on the constant changes in the hotel
industry.